CIPS accelerates the internationalisation of the RMB

The cross-border interbank payments system (CIPS) launched by the Chinese central bank on 8 October 2015 has made it much easier for correspondent banks to execute payment instructions on behalf of clients participating in cross-border transactions denominated in renminbi (RMB). The fact that CIPS has also adopted the ISO 2022 international payments messaging standard is now facilitating the widening of the cross-border connectivity of CIPS, not only with other payments market infrastructures (PMIs), but with correspondent banks around the world as well. All the speakers in a session on CIPS at Sibos in Geneva on 26 September 2016[1] agreed that the use of global messaging standards by the new infrastructure is increasing RMB transaction volumes and accelerating the evolution of the RMB into a major global currency.

The first anniversary of the launch of the cross-border interbank payments system (CIPS) in China has just passed. Its adoption of global payments messaging standards is now set not only to accelerate the growth of CIPS, but to further internationalise the renminbi (RMB).

CIPS was launched in October 2015 by the People’s Bank of China (PBOC), and has since seen 27 direct participants and almost 400 indirect participants begin to use the system. Daily transaction volumes are around RMB 40 billion.

A catalyst for the growth in the number of participants using CIPS has been the memorandum of understanding (MoU) agreed between CIPS and SWIFT, and signed in Beijing in March this year. The MoU is helping the new payment system to integrate with the global banking community.

To showcase the progress of CIPS since it penned the agreement with SWIFT, leading experts from the Chinese payments sector gathered at Sibos to explain current and future developments, in the context of the ongoing internationalisation of the RMB.

From a practical perspective, a key priority is to ensure CIPS is inter-operable with international banks and payment market infrastructures (PMIs) through adoption of recognised processes and protocols.

“CIPS is working with SWIFT to update its user manual,” said Xin Zhang, General Manager, China International Payments Service Corporation. “We will evolve it into a comprehensive CIPS Rulebook which covers the standardised CIPS ISO 20022 messaging practices, the latest e-version of the Chinese Commercial Code (e-CCC) table, as well as the RMB payment routing reference data. Very importantly, we are also working on leveraging the SWIFT network to connect more overseas participants and enhancing our global RMB transaction data analysis platform.”